People can manage debts themselves or pursue a management plan

Individuals, including residents of Maricopa, Arizona, who find themselves in consumer debt may not know how to handle it. When faced with mounting debts, people can choose between a debt management plan or a DIY debt reduction plan.

If individuals choose to pursue a debt management plan, they must include all or most of their credit cards in the plan. Credit card companies may not want to lower interest rates and agree to the terms of a formal plan if a consumer continues to pay higher rates to other credit cards that are not included in the management plan.

If an individual does not want to give up their credit cards or enter into a formal plan, they can create their own informal plan to pay down debts. Some card issuers may be willing to reduce interest rates on an individual basis, so telephone calls to existing credit card companies may be a good place to start. After determining an amount they can pay each month, the consumer can make the largest payments to the credit cards with the highest interest rates. When an individual pays off a credit card, they can begin paying down the amounts owed on the next card until all cards have a zero balance.

Consumers may be able to take charge of their debts, but some escalating financial obligations may be difficult to pay off. Individuals who may not be able to pay their debts may want to consult with an attorney who has knowledge of bankruptcy law. A lawyer may be able to discuss the positive and negative ramifications of a bankruptcy filing, and the attorney may be able to go over bankruptcy alternatives and financial planning with a client.

Source: FOX Business, "You Must Include all Debts in a Management Plan", Erica Sandberg, February 28, 2014

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  • State Bar of Arizona
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  • NACA | National Association of Consumer Advocates
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